NO. 94-576

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

MONTANA PUBLIC EMPLOYEE'S

ASSOCIATION, a Montana NonProfit Corporation, Sally

Russell Steve Warn, John

Starcevich, Pam Aldridge,

Carol Huggins, Joyce Crawford,

Kristie Milligan, and Fred

Marshall, et al.,

Plaintiffs and Appellants,

-v- JUN%O 1995

OFFICE OF THE GOVERNOR, Governor

Stan Stephens, MONTANA DEPARTMENT

OF TRANSPORTATION, and MONTANA

DEPARTMENT OF SOCIAL AND

REHABILITATION SERVICES,

Defendants and Respondents.

APPEAL FROM: District Court of the First Judicial District,

In and for the County of Lewis and Clark,

The Honorable Jeffrey Sherlock, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Carter N. Picotte, Helena, Montana

For Respondent:

Nick A. Rotering, Lyle Manley, Montana Department of

Transportation, Helena, Montana; Russ Cater, Montana

Department of Social and Rehabilitation Services,

Helena, Montana

Filed:

Submitted on Briefs: March 23, 1995

Decided: June 20, 1995
Justice James C. Nelson delivered the Opinion of the Court.

This is an appeal from an order of the First Judicial District

Court, Lewis & Clark County, granting Respondents' motion for

summary judgment terminating Appellants' declaratory judgment

action. We affirm.

The issues on appeal are:

1. Whether the District Court erroneously determined

that the actions of Governor Stan Stephens did not

violate Article II, Section 31 of the Montana

Constitution and Article I, Section 10, of the

Constitution of the United States.

2 . Whether the District Court erroneously

determined that Governor Stan Stephens did not violate

Article III, Section 1, of the Montana Constitution.

Background

Appellants filed their declaratory judgment action in District

Court on January 6, 1993. Following briefing and oral argument on

their cross motions for summary judgment, the District Court

granted Respondents' motion and denied Appellants'. In their

Complaint, Appellants contend that for a period of at least 15

years previously, the State of Montana had in place a system of

employee compensation set forth at 55 2-18-301, et seq., MCA. That

compensation system incorporated basic pay levels, or grades, and

a series of sub-levels within each grade, or steps, under which an

employee received higher compensation depending upon the amount of

time spent in employment. Appellants also contend that for many

years, it had been the practice of some state agencies, including

the respondent agencies, to subtract or take away steps when

promoting employees more than one grade level.

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By way of example, Appellants explain that when a person at

grade 12, step 6, was promoted to grade 14, the employee would be

placed in step 4, thus losing 2 steps and the compensation that

went along with the Z-step loss. While the promoted employee would

not actually suffer a reduction in compensation, he or she would

receive less of a pay increase than if the promotion included not

only the higher grade, but also no reduction in steps.

In 1991, the directors of the Departments of Transportation

and Social and Rehabilitation Services determined to reinstate the

steps lost by qualified employees. Employees were so informed by

a written announcement that included instructions for employees to

complete and return to their respective departments.

Before the lost steps could be reinstated, however, Governor

Stan Stephens issued a May 15, 1991 memorandum to all department

directors prohibiting them from reinstating steps lost to multigrade promotions. Accordingly, the proposed plan to reinstate the

lost steps was withdrawn by each department. Appellants contend

that the Governor acted unconstitutionally.

Discussion

Under Rule 56(c), M.R.Civ.P., summary judgment is proper only

when no material fact exists and the moving party is entitled to

judgment as a matter of law. The initial burden is on the moving

party to establish that there are no genuine issues of material

fact. Once that burden has been met, the burden then shifts to the

party opposing the motion to establish otherwise. Spain-Morrow

Ranch, Inc. v. West (1994), 264 Mont. 441, 444, 872 P.2d 330, 331-

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32. In determining the propriety of summary judgment, we will

utilize the same criteria as the district court; our review is &

m. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849

P.2d 212, 214.

1 . Whether the District Court erroneously determined

that the actions of Governor Stan Stephens did not

violate Article II, Section 31, of the Montana

Constitution and Article I, Section 10, of the

Constitution of the United States.

Appellants contend that Governor Stephens violated Article II,

Section 31, of Montana's Constitution and Article I, Section 10, of

the United States Constitution in prohibiting the step

reinstatement plan from being implemented. Both of those

constitutional provisions prohibit the respective legislative

branches of government from passing legislation that impairs

contractual obligations. In rejecting Appellants' contentions, the

District Court concluded that, here, no action was taken by the

legislature. Rather, the action taken was by the Governor, and the

subject constitutional provisions were, thus, not implicated.

Appellants, however, maintain that because the allegedly

offending acts of the Governor were authorized by 5 z-15-103, MCA,

which provides that, subject to the constitution, the governor

shall formulate and administer policies of the executive branch, in

essence, his acts were those of the legislature in impairing

Appellants' contracts.

Without agreeing or disagreeing with the District Court's

rationale, we conclude that Appellants' arguments are resolved at

a more fundamental level. In order for there to be an

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unconstitutional impairment of a contractual obligation, there must

first be a contract in existence. Matter of Yellowstone River

(1992), 253 Mont. 167, 183, 832 P.Zd 1210, 1219. In that case,

citing other Montana decisional authority, we stated:

Montana has adopted a three part test to determine

whether legislation has violated the impairment of

contracts clause. [Citations omitted]. "The threshold

inquiry is whether the state law has, in fact, operated

as a substantial impairment of the contractual

relationship." [Citations omitted]. Implicit in this

inquiry is the existence of a contract. The appellants

have failed to demonstrate the existence of any specific

contract let alone its impairment. This is fatal to

appellants' claim. (Emphasis added.)

Yellowstone River, 832 P.Zd at 1219

Similarly, Appellants in this case have failed to demonstrate

the existence of any contract under which they had a vested right

to reinstatement of the lost steps. "It is essential to the

existence of a contract that there be . . a sufficient cause or

consideration." Section 28-2-102(4), MCA. Consideration requires

that the contracting parties, each as to the other, confer some

legal benefit and/or incur some detriment as an inducement to

performance. Section 28-Z-801, MCA. See also Title 28, Chapter 2,

part 8, generally and Boise Cascade Corp. V. First Security Bank

(1979), 183 Mont. 378, 391, 600 P.2d 173, 181

Here, the Appellant employees gave nothing of value for the

department directors' gratuitous offer to reinstate the lost steps

and, the offer being gratuitous, it could be revoked at any time.

No contract is created when performance is entirely optional with

the promisor. Matter of Estate of Haggerty (1990), 246 Mont. 351,

356, 805 P.2d 1338, 1342. See also Boise Cascade Corv., 600 P.2d

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at 181.

Moreover, Appellants' prior work could not serve as

consideration for the State's offer to reinstate the lost steps,

inasmuch as, generally, past consideration is not sufficient to

support a promise. In Tindall v. Konitz Contracting, Inc. (1989),

240 Mont. 345, 783 P.2d 1376, we quoted with approval the following

statement of that principle:

'I [al promise supported by past consideration is

unenforceable because the detriment did not induce the

promise. That is, 'since the detriment had already been

incurred, it cannot be said to have been bargained for in

exchange for the promise."'

Tindall, 783 P.2d at 1379.

Accordingly, there being no consideration for the department

directors' offer, no contract was formed under which the appellant

employees gained any vested rights to the reinstatement of the lost

steps. There being no contract in existence, there were no

contract obligations which were impaired by the Governor's actions.

We hold that Governor Stephens' actions here did not violate

Article II, Section 31, of the Montana Constitution or Article I,

Section 10 of the United States Constitution.

2 . Whether the District Court erroneously determined

that Governor Stan Stephens did not violate Article III,

Section 1, of the Montana Constitution.

Appellants next contend that Governor Stephens violated the

doctrine of separation of powers in that he unlawfully attempted to

obstruct the legitimate exercise of duties granted to the

Department of Administration by the legislature. Article III,

Section 1, of Montana's Constitution prohibits one branch of

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government from exercising any power properly belonging to the

other two branches.

According to Appellants, by enacting the pre-1991 provisions

of the State pay plan, iS§ 2-18-101, et seq., MCA), the

legislature, pursuant to Article VI, Section 7, of Montana's

Constitution, charged the Department of Administration as being the

executive agency solely responsible for the administration and

implementation of that plan, with rulemaking authority in

furtherance of those responsibilities. Appellants maintain that

the Department of Administration did, by adopting pay plan Rule No.

1809, vest discretion in agency heads for the treatment of steps in

the pay plan. Therefore, according to Appellants, since the

legislature allocated to the Department of Administration the power

to administer the pay plan, the Governor, as the highest executive

officer of the State, was without authority to "interfere in or

dominate the discretion and judgment of other executive branch

officers , , . [such as the department directors here1 in the

exercise of those powers conferred by law upon them, unless the

power of review or the requirement of approval is imposed by the

Legislative delegation of power." In countermanding the department

directors' offer to reinstate the lost steps, Appellants conclude

that Governor Stephens, thus, violated the doctrine of separation

of powers.

The District Court rejected Appellants' argument, concluding

that the Governor was not interfering with the Department of

Administration's delegated authority over the State pay plan, but,
rather, was simply exercising his legitimate power over other

executive agencies under §.§ Z-15-104 and 2-15-103, MCA. We agree

with the District Court.

Article VI, Section 4, of Montana's Constitution vests

executive power in the Governor. The statutory duties of executive

branch officers and agencies are generally found at 5 2-15-101, et

seq., MCA, commonly referred to as the Executive Reorganization

Act. Section 2-15-103, MCA, recognizes the constitutional status

of the governor as the State's chief executive officer and, subject

only to the constitution and other State laws, requires the

governor to formulate and administer the policies of the executive

branch with "full powers of supervision, approval, direction, and

appointment over all departments and their units." Moreover, that

statute provides that whenever a conflict arises as to the

administration of the policies of the executive branch of state

government, with exceptions not at issue here, "the governor shall

resolve the conflict, and the decision of the governor is final."

In addition, 5 2-15-201, MCA, further prescribes the powers and

duties of the governor including that "[h]e shall supervise the

official conduct of all executive and ministerial officers."

While under 5 2-18-102, MCA, and parts 2 and 3 of Title 2,

Chapter 18, MCA, the Department of Administration has broad powers

and duties to implement and administer the State classification and

pay plan as generally set forth in that Title and Chapter,

nevertheless, those statutory powers and duties must be read in

conjunction with the governor's statutorily prescribed duties of

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supervision, approval, appointment and direction over executive

agency departments and their heads while also taking into

consideration his constitutional status as chief executive officer

of the State.

Appellants' interpretation of the constitutional provisions

and statutes mentioned, treats the Governor's duties and the duties

of the Department of Administration and the heads of the executive

agencies as regards the classification and pay plan as mutually

exclusive. However, we find nothing in the above statutory scheme

that supports such an interpretation or that would have prohibited

Governor Stephens' actions in this case. Likewise, we conclude

that the doctrine of separation of powers is not violated where the

governor exercises the very sorts of powers and duties authorized

by the legislature in the statutes it enacted. Contrary to

Appellants' contentions, Governor Stephens did not exercise any

power belonging to the legislative branch; he simply executed his

statutory duty to supervise and direct the heads of two executive

departments in their making of a discretionary decision involving

the implementation of the State pay plan. As was the District

Court, we are not persuaded to a contrary conclusion by Appellants'

arguments or by any authorities cited. Accordingly, we hold that

Governor Stephens' actions here did not violate Article III,

Section 1 of the Montana Constitution.

Finally, Appellants do not cite this Court to any genuine

issues of material fact that are in dispute, and, having reviewed

the record and the briefs, we are satisfied that there are none.

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Under the undisputed facts of this case, we hold that Respondents

were entitled to judgment as a matter of law.

Accordingly, the Order of the District Court dated September

1, 1994, grant ing summary judgment to Respondents and denying

Appellants' mot ion for summary judgment is

We Concur:

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